Perceived Risk for Services in the Consumer Buying Cycle: A Comparison of the Impact of Alternative Delivery Systems

This research investigates the premise that Internet shopping is perceived to be riskier than traditional shopping. Unlike previous studies on perceived risk that typically focused on the relationship of perceived risk and information search, this exploratory study examines the dynamics of perceived risk throughout the various stages of the consumer buying process. A survey of 159 respondents reveals a risk premium for Internet services that follows a systematic pattern throughout the consumer buying process. When viewed as a dynamic process, perceived risk for Internet services shows more radical changes in risk levels than for traditional services. The analyses indicate that financial risk drives the risk premium for many services while performance risk and physical risk play ancillary roles as risk drivers at certain stages for selected services. A major implication of this study is that there is a risk premium for Internet services and the risk premium permeates all stages of the consumer buying process. The second major implication is that perceived risk behaves somewhat inconsistently related to the accepted perceptions of this concept for traditional delivery methods. Based on the limited information in this study, perceived risk continues as a significant factor beyond information search and is influential in the purchase and post-purchase stages.